Technical View: Nifty forms bullish candle; 9926 remains key for bulls

The Bulls clawed back on D-Street on Wednesday after getting mauled by bears in the previous trading session. The Nifty50 managed to close above crucial moving averages but witnessed sell off nearly its 20-days moving averages (DMA).

The index made a bullish candle on the daily candlestick charts and now a close above 9900-9,926 in the coming week could trigger fresh upside in the index, suggest experts.

A bullish candle is formed when the Bulls remain in control throughout the trading day and the closing level is higher than the opening level.

The Nifty closed above its crucial moving averages such as 5-DEMA, 10-DEMA, and 13-DEMA but failed to close over 20-DMA placed at 9,900 levels.

The Nifty50 index rose to an intraday high of 9909 which resulted in small upper shadow and dropped 50 points to hit its intraday low of 9850 which made a small lower shadow. The Nifty50 finally closed 88 points higher or 0.90 percent at 9884.40.

“Albeit Nifty50 recouped all the losses witnessed in Tuesday’s trading session patterns are clearly suggesting that as long as it stays below 9926 levels the threat of big fall shall continue to remain,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“The structure of this consolidation from the lows of 9685 is clearly pointing towards a B Wave Triangle and Wednesday’s up move can be the last leg of such a triangle which should pave the way for a bigger breakdown. To negate this pattern Nifty50 should trade at least above 9,926 levels in next trading sessions,” he said.

Mohammad is of the view that confirmation in this regard shall come once we start trading above 9,926 levels and in that scenario slowly if bulls succeed in pushing the indices beyond 9,948 and closure to 10,000 then the best option of a range bound move between 10,000 to 9700 can open up.

The Nifty50 index has managed to regain its losses made on Tuesday but overall it has been consolidating in the broader range of 9,750 to 9,944 from the last couple of sessions.

The Nifty Future closed positive with the gains of 0.83 percent at 9,880. On the options front, maximum Put OI was seen at strike prices 9,800 while maximum Call OI was seen at 10,000 followed by 9,900.

Fresh Put writing was seen at strike prices 9,900 and 9,850 while major Call unwinding was seen at 9800, 9850 and 9900 strikes. India VIX fell down by 4.83% at 12.88. VIX has to hold below 12.50 to get a stable market movement.

“Option data suggest a hold above 9820-9850 while upside could be restricted to 9950-9980 for current expiry. On the technical front, Nifty index formed a Bullish candle on the daily chart and again bulls have taken the index above its 50DEMA near to 9880 zones,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“It has been respecting to its rising support trend line by connecting the recent swing lows of 9075, 9448 and 9685 mark. Now, if sustains above 9880 then up move could be seen towards 9950 then 10020 while on the downside supports are seen at 9820 then 9775,” he said.